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Halftime: Traders Beg Santa For Coal

If bad girls and boys end up with coal in their stockings, this may be the year to be very, very bad.

Coal as well as metals and other commodities have been on fire this December with the CRB Commodities Index making 2 year highs and the risk-on trade driving a Santa Claus rally.

"The (market) psychology has changed. With interest rates coming up, the bond market is telling you, you don't want to be in bonds if the economy may be improving next year. So a lot of that money is starting to move into the stock market," says Paul Mendelsohn, chief investment strategist at Windham Financial Services in a Reuters interview.

And the Fast traders expect a sizable portion of that money will rotate into commodities as the world bets on “things that hurt when you drop them on your foot.”

How should you position now?

Pete Najarian remains bullish coal stocks especially after reports suggested that Massey Energy has received an offer from Alpha Natural Resources. “The coal names have been on fire but this didn’t just start today,” he says. "This has been going on for a while.”

Steve Cortes feels a little differently; he would not put money to work in coal stocks. “Coal is too hot to be short but I think it’s run too far to be long,” he says. And Cortes is also at a loss to understand how coal as well as copper have delinked from China. “Coal as well as copper have chugged higher but China has traded terribly. That means either China is a buy or coal and copper have come too far.”

In this space, Brian Kelly is bullish copper. He says, “Copper imports into China are up for the first time in months,” and “I think there’s a real squeeze for copper. Just imagine if the US housing market stabilizes. I think copper is going much, much higher in 2011.”

Patty Edwards agrees but counsels that playing copper with Freeport McMoRan may be a mistake. With ETFs backed by physical holdings of copper getting ready to make their U.S. debuts, she cautions money could rotate out of FCX which is currently used as a proxy for copper.

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TRANSPORTS HIGHER LED BY AIRLINE STOCKS

Airlines were some of the strongest stocks Tuesday, with US Airways and AMR both making noteworthy gains.

What’s the trade?

I’m still bullish Alaska, says Patty Edwards. I’m not seeing added capacity or any slowdown in demand. As long as we don’t see oil spike, I’d continue to ride it.

If I were to be involved I’d also get long Alaska because I think it has the best chart, says Steve Cortes.


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BACK TO BUSINESS FOR BANKS

Is it back to business for the banks? JPMorgan led financials higher Tuesday after the bank said it had boosted small business lending by over 40 percent this year.

What’s the bank trade?

I’ve watching some bullish options action in the financials, says Pete Najarian. A larger than usual volume of Jan 26 calls in the KRE and Mar 17 calls in the XLF suggests to me that some investors expect to see a sharp move higher.

I’m still short BofA , reminds Steve Cortes, but right now the trade isn’t working. Although I’m a fan of the brokers I’m not a fan of money center banks; I think they’re still hobbled by lingering mortgage issues.

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BUY AMAZON AT THESE LEVELS?

Take a look at our chart of the day.

Amazon.com hit a new all time highs in Tuesday’s session. And Ben Schachter from Macquarie Equities Research thinks it can go even higher.

He’s got a $205 price target on the stock.

Schachter tells the desk he’s crunched the numbers and believes Amazon is similar to Walmart, when Walmart was in the throws of explosive growth.

He sees no reason that Amazon won’t grow even faster than Walmart did in the 1990’s.

Hear his entire thesis. Watch the video above.




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Trader disclosure: On December 21st, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian owns (KRE) calls; Pete Najarian owns (YHOO); Pete Najarian owns (MSFT) call spreads; Pete Najarian owns (AKAM) call spreads; Pete Najarian owns (V) call spreads; Pete Najarian owns (WLT) call spreads; Pete Najarian owns (C); Pete Najarian owns (MS); Pete Najarian owns (NKE) call spreads; Pete Najarian owns (GE); Pete Najarian owns (F); Pete Najarian owns (BBY) calls; Pete Najarian owns (SMH) call spreads; Pete Najarian owns (M) call spreads; Pete Najarian owns (HK) calls; Pete Najarian owns (MRO); Pete Najarian owns (CNI); Cortes is short (XRT) vs. (SPY); Cortes is short (BAC) vs. (SPY); Cortes is short (MOS); Cortes is short (LVS); Cortes is long USD vs. Mexican Peso; Cortes is short European Stoxx Index; Cortes is short Corn; Cortes is short Nat Gas; Cortes is short Gold

For Brian Kelly
Accounts Managed By Kanundrum Capital Own (JPM)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (AKAM)
Accounts Managed By Kanundrum Capital Own (JEF)
Accounts Managed By Kanundrum Capital Own (SLV)
Accounts Managed By Kanundrum Capital Own (SWC)
Accounts Managed By Kanundrum Capital Own USD
Accounts Managed By Kanundrum Capital Own (CLF)
Accounts Managed By Kanundrum Capital Own (QCOM)
Accounts Managed By Kanundrum Capital Are Short The Yen
Accounts Managed By Kanundrum Capital Are Short The Euro

For Patty Edwards
Edwards owns (ALK) for clients
Edwards owns (AAPL) for clients
Edwards owns (MSFT) for clients
Edwards owns (GS) for clients
Edwards owns (C) for clients
Edwards owns (CME) for clients
Edwards owns (V) for clients
Edwards owns (NKE) for clients
Edwards owns (CBI) for clients
Edwards owns (AMZN) for clients
Edwards owns (F) for clients
Edwards owns (GM) for clients
Edwards owns (GLD) for clients
Edwards owns (TTM) for clients
Edwards owns (SLV) for clients
Edwards owns (GE) for clients
Edwards owns S&P 500 for clients
Edwards owns Nasdaq for clients

For Paul Sankey
(SUN) is an investment banking client of DBSI
Deutsche Bank and/or its affiliate(s) has received non-investment banking related comp. from (SUN) within past year
Deutsche Bank owns 1% or more of any class of common equitys securities of (VLO)
(VLO) is an investment banking client of DBSI
Deutsche Bank and/or its affiliate(s) has received non-investment banking related comp. from (VLO) within past year
(VLO) has been a client of Deutsche Bank Securities within the past year, receiving non-investment banking securities-related services
(FRO) is an investment banking client of DBSI
(HOC) is an investment banking client of DBSI

Regis Philbin SOT
Philbin has no disclosure in (MU)

GE is the parent company of CNBC
NBC Universal is the parent company of CNBC



CNBC.com with wires.

Symbol
Price
 
Change
%Change
ALK
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AAL
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AMZN
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ANR
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BAC
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FCX
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JPM MLP ETN
---
KOL
---
KRE
---
USG1
---
SPDR FIN SEL
---
JEFFERIES GCEI
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